HUF: Dovish inflation shift points to rate cut – Commerzbank

💡 DMK Insight

A potential 25bp rate cut from Hungary’s MNB could shake up the forex market today. Traders need to pay attention to the mixed signals from Governor Varga, who recently adopted a hawkish stance despite softer inflation data. If the MNB does proceed with the cut, it could lead to a depreciation of the Hungarian Forint against major currencies, particularly the Euro and USD. This is crucial as it aligns with broader disinflationary trends across the EU, which might prompt other central banks to reconsider their policies. Watch for immediate reactions in the forex pairs, especially if the cut is confirmed or if guidance shifts further. On the flip side, if the MNB surprises the market by holding rates steady, expect a short-term rally in the Forint as traders recalibrate their positions. Keep an eye on the EUR/HUF and USD/HUF pairs for volatility, especially in the hours following the announcement. The market’s response could set the tone for the rest of the week, so be ready to adjust your strategies accordingly.